POST OFFICE (CHARGES)

I beg to move,
That an humble Address be presented to Her Majesty, praying that the Inland Post Amendment (No. 3) Regulations 1966 (S.I., 1966, No. 911), dated 22nd July 1966, a copy of which was laid before this House on 28th July, be annulled.
Mr. Deputy Speaker, as the background of all these six Motions in the names of my hon. Friends and myself are fairly similar, it might be for the convenience of the House to debate them together; and they are as follows:
That an humble Address be presented to Her Majesty, praying that the British Commonwealth and Foreign Post Amendment (No. 2) Regulations 1966 (S.I., 1966, No. 912), dated 22nd July 1966, a copy of which was laid before this House on 28th July, be annulled.That an humble Address be presented to Her Majesty, praying that the British Commonwealth and Foreign Parcel Post Amendment (No. 2) Regulations 1966 (S.I., 1966, No. 913), dated 22nd July 1966, a copy of which was laid before this House on 28th July, be annulled.That an humble Address be presented to Her Majesty, praying that the Postal Order Amendment (No. 1) Regulations 1966 (S.I., 1966, No. 914), dated 22nd July 1966, a copy of which was laid before this House on 28th July, be annulled.That an humble Address be presented to Her Majesty, praying that the Telephone Amendment (No. 2) Regulations 1966 (S.I., 1966, No. 857), dated 15th July 1966, a copy of which was laid before this House on 28th July, be annulled.That an humble Address be presented to Her Majesty, praying that the Telephone (Channel Islands) Amendment (No. 3) Regulations 1966 (S.I., 1966, No. 858), dated 15th July 1966, a copy of which was laid before this House on 28th July, be annulled.

My hon. Friends and I oppose these Statutory Instruments by the Postmaster-General more on principle than merely on the increases which are laid down therein. We object to the deceptive ways in which these increases were introduced.

The Postmaster-General knows and the Prime Minister knows that, ever since
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the 1961 Act, no longer has the Post Office been tagged on to the apron strings of the Treasury. In the White Paper which preceded the Act of 1961, we read in paragraph 3:
It is now proposed to give the Post Office greater commercial freedom.
It goes on:
Its current finances will be severed from the Exchequer.
Then we see, referring to the Postmaster-General:
He will have greater scope and responsibility for running the Post Office as a self-contained business.
Later, it says:
The proposed status should be a renewed spur to enterprise within the Post Office.
It is not only since 1961, but for the last 10 years or so, that every postal increase announced by the Postmaster-General has not been announced by the Chancellor of the Exchequer or by the Prime Minister, but has been brought forward by the Postmaster-General in his rôle as head of this business which the White Paper described, uncamouflaged by or mixed up with any other nonsense, and these charges have been duly considered by the House and open to debate.

These increases have been introduced in quite another way. On 20th July we listened to the catalogue of restrictions read out by the Prime Minister, which marked the final collapse of Socialist economic policy. All the "stop-go" phrases which were never going to be used were mumbled out. We heard all the old phrases, such as activating the regulator, duties on beer, wines and spirits, Purchase Tax, petrol tax, and the rest, and then, all of a sudden, to everybody's astonishment, the Prime Minister said:
In addition, a further £20 million will be taken out of the economy as a result of changes announced by my right hon. Friend the Postmaster-General …"—[OFFICIAL REPORT, 20th July, 1966; Vol. 732, c. 630.]
We know why this was done. We were not meant to notice this little insertion within all the other mysteries. The Prime Minister knew that this was wrong, but he could not resist the trick. Did the Postmaster-General object to this treatment? Or was he in the same position as the Minister of Agriculture when he suddenly found that the agricultural industry was landed with S.E.T.? Later
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it was murmured around that he had not been consulted.

Let us be quite clear about this. The postal charges have been used as a budgetary instrument. At Question Time on 20th October last the Under-Secretary of State for Economic Affairs said in answer to my hon. Friend the Member for Chigwell (Mr. Biggs-Davison):
The increases in postal charges were an integral part of the measures necessary to remedy the economic situation …"—[OFFICIAL REPORT, 20th October, 1966; Vol. 734, c. 377.]
There it is. It could not be straighter than that. Postal charges are to be used like a regulator, like hire-purchase restrictions, and so on. Will the right hon. Gentleman tolerate that? Is it right? A regulator goes down as well as up. When we have a million unemployed, will postal charges go down, with the tax on beer, as an integral part of the measures necessary to remedy deflation?

This sleight of hand confuses all the true costs and charges, and goes against all the new trends of Post Office policy. The whole trend has been towards a commercial undertaking. The 1961 Act, and the statement by the Postmaster-General on 3rd August, were towards a more commercial, a more business-like approach. This manoeuvre has gone right against that.

Let me hurry on, since time is short, from deception to the unfairness in making these increases during a statutory prices freeze. In his new rôle as "businessman", as described in the White Paper, why does the right hon. Gentleman evade the rigours that go with that status? Why does he allow his commercial undertaking to be singled out for cushy treatment?

In the Labour Party election manifesto, as amended on 20th July, we were told that for the good of the country wages and prices should be frozen, and bank balances reduced except in the case of exporting firms. What logically followed, and I agree it logically followed, was that it was bad for the country if laundries raised their prices. So bad was it considered to be that the full force of Part IV was invoked. So bad was it for the country that the Government were willing to risk a breakdown in relations with the C.B.I., despite the fact that the
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consequential increase following the increase in laundry prices was minimal.

We were very puzzled, indeed, when we found that although that was bad for the country, it was good for the country for postal charges to go up; Postal charges affect literally every cost and person—old age pensioners, exporting industries, and all manufactures. Everything is affected by this increase. Indeed Statutory Instrument No. 912 singles out exports. Postage abroad is put up by 50 per cent. or so. Last time, in 1965, when the letter rate went up by 33½ per cent., the then Postmaster-General said:
The extent of this increase has been decided in the light of the decision on productivity prices and incomes.
That was not believable. This time we are told that it is an integral part of the necessary measures. How does the Postmaster-General answer the straight question: why is the Post Office immune from the prices freeze? He could answer, "Because we are a Government Department", but in Statutory Instrument No. 1021 on Prices and Incomes, we read in paragraph 32:
The Government intend to apply the principles of the standstill to all prices, charges and fees of Government Departments.
The right hon. Gentleman may say, "We are a nationalised industry, so we are immune". but we read in paragraph 34:
The nationalised industries will be subject to the same restraints as the private sector in relation to prices and incomes.
So by what right is the Post Office singled out as the only industry which is immune from the prices freeze? On both these answers the right hon. Gentleman would be shot down.

I do not believe that the Postmaster-General honestly understands what has occurred. In answer to a Question I put the other day, asking why, if he agreed that this was a budgetary measure, it should take place in this way, he said that if it was not done in this way the taxpayer would have to pay the cost in his tax just the same. He therefore either agrees that Post Office charges should be a budgetary regulator, or if not, that the finances of the Post Office after two years of the no alibi era are in such
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a parlous state that it cannot hold its prices, like lesser mortals have to do, for six months. It has to be immediately recouped from the taxpayer to put the finances right. Despite the fact that there is a profit of £40 million and 8 per cent. on its capital, the charges must go up straight away. Imagine what would be said if a laundry contended, "We must put up prices because we are getting only 8 per cent."

Now that the Postmaster-General has become a businessman he must realise that all over the country businesses have precisely the same problems as the Post Office.

Part IV would be invoked. The Post Office, nevertheless, goes on as the only institution with its life unchanged; it cannot wait six months. I ask the Postmaster-General if all other Post Office charges are to go up. I have had a letter from Messrs. Turnbull of Leeds, removal contractors, which tells me that the advertisement in the Leeds, Bradford and York Classified Telephone Directory has risen in cost. from £53 to £66—a rise of 25 per cent. If this is so, may I ask if, under the Government freeze, any other advertising contractor is allowed to raise his prices.

I have concentrated on the method and background of these price increases, first because they appear to be a part of a plan, or at any rate an irresistible instinct, to insulate nationalised industry from all the normal yet freakish hazards of commercial life under Socialism, and secondly, because we believe that if the Postmaster-General must raise charges he should announce them himself, debate them without fear, and not allow them to be mixed up with a bundle of the Prime Minister's dirty washing.

I am as amazed as my hon. Friend the Member for Howden (Mr. Bryan) that this great Department should be singled out to be used as a pawn. One can use no other word to describe the way in which it has been used by the Prime Minister in his statement of 20th July, in which he said
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that the Post Office would be used to take £20 million out of the economy. Probably hon. Gentlemen do not realise that he went on to say that the telecommunications changes would mean no net increase to the Post Office. Therefore, in the midst of a so-called economic crisis, the Prime Minister was using this opportunity to shuffle about telephone charges, which would in the end mean no net increase to Post Office revenue. This was announced by the Prime Minister rather than by the head of the Department, the Postmaster-General.

But taking this further brings us to the economics of Bedlam. The Post Office "jumped the gun". Either it was used as a pawn to take £20 million out of the economy, or this opportunity was taken to raise prices generally within the Post Office, which was quite contrary to the Second Schedule to the Prices and Incomes Act, to which every trade unionist and manufacturer is expected rigidly to adhere. One can only repeat what my hon. Friend said about paragraph 32, which ought to be framed.

Let us remember that that Schedule was introduced into the Bill only after the House had dealt with the whole Bill. Incidentally, I asked in Committee why the Schedule was not changed, as it was out of date. I was told that there was no need to change it, when, as we now know, the new Second Schedule was already in print to replace it.

Nevertheless, paragraph 32 makes it clear:
The Government intend to apply the principles of the standstill to all prices, charges and fees of Government Departments.
Yet the Prime Minister said, "We are using the Post Office to take £20 million out of the economy."

All right. If we were in such dire straits—this was the principle followed by the Prime Minister—could he not have got us out of them more quickly, on this formula, by raising the price of coal, electricity, gas or railway fares? This would have been just as justified as the action which he took in singling out the Post Office for charges to be raised. Why is it such a marvellous social benefit to the nation that the Post Office should raise its charges, while everyone else in the country is called upon to exercise wage and price restraint, regardless
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of the increases which have gone on?

Another valid question in this mixed-up situation is this: has the Post Office agreed to pay any increase to its carriers, the contractors who carry the mails all over the world, who have also had additional costs to meet? After all, if the Post Office is allowed, by special treatment, to raise certain charges by between 20 or 30 per cent., surely the carriers ought to have some little share of it. I would like to lay odds that none of these carriers will ever see any of this increase.

So we come back to the basic point, that this Minister of a great Department of State has been reduced to nothing more than a pawn by the Prime Minister's deciding that he will solve the economic situation which he created by his own action. It reminds me of a wife, who always gets one out of difficulties which one would never have got into if one had not married. This is the problem of the present Government, that they have put up all sorts of Aunt Sallies and then seek to convince the nation that they are very expert in knocking them down.

I believe that we are right to move these Prayers. I hope that my hon. and right hon. Friends will press this to a Division, to show how strongly we feel about this whole sordid affair.

My hon. Friends have pointed to the dilemma in which the Postmaster-General finds himself this evening. Either he has to defend these charges on the ground that they were needed to put the Post Office finances right, in which case he convicts his right hon. Friend the Prime Minister of double talk on 20th July, or he has to say that they were made necessary by the economic crisis caused by the Government, in which case he will be saying something which is plainly untrue.

This is a very dangerous dilemma for the Postmaster-General, because on 20th July these changes were put forward very much as part of the deflationary package. The Prime Minister filled 12 columns of HANSARD with the details of changes in Post Office charges. I hope that the Government's foreign paymasters
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were suitably impressed, as they scrutinised HANSARD, to find the Prime Minister taking such an intimate interest in raising the charge of an alarm call from 9d. to 1s. It was the first time for a very long time—in any case since 1955—that the Post Office had been trundled out as part of the Government's armoury to deal with the economic crisis, a crisis caused by this Government.

Unfortunately for the Prime Minister, as my hon. Friend said, he lent himself to this fiction by saying that these measures were an integral part of the measures necessary to remedy the economic situation. This is quite the most absurd part of the Government's economic doctrine, and one cannot say more than that. When private industry puts up its prices, that is inflation. When the Post Office or the Government or a nationalised industry puts up its prices, that is deflation. We are well used to double standards from this Government but this is a bit more than double standards; this is taking opposite standards and making complete nonsense of the entire economic policy of the Government.

It is in complete contrast to what the Government do with other industries. For example, the road hauliers are treated in a totally different way by the Minister of Transport whenever there are any maintenance troubles in that industry. They are revealed publicly, and quite rightly so, but the failures of Post Office maintenance are treated very privately indeed.

What is the case that the Postmaster-General has for saying that these measures were caused by the Government's economic mismanagement? Although the economic mismanagement is an undoubted fact and although these increased charges are also an undoubted fact, that these two are connected is plainly not a fact and does not stand up to examination. On the day before these charges were announced, the Post Office said that it needed tariff increases. As time is short, I will not read them out. Although coincidences happen, this is a fairly considerable coincidence. On one day, tariff changes are said to be necessary. On the next day the Prime Minister suddenly imports into a major economic statement the 12 columns in
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HANSARD about Post Office charges and alarm calls.

The Postmaster-General, in his truthful way, revealed completely the folly and fallacy of all this, because on 25th July my hon. Friend the Member for Richmond, Surrey (Mr. A. Royle) asked the right hon. Gentleman what the effect of these increases would be, and he was told that these charges would remove £1 million of purchasing power in the three months following the Prime Minister's statement. Not even the Postmaster-General—I am sorry; nobody would say that this was an important deflationary measure or that £1 million was an important part of the freeze. By that factual statement the Postmaster-General revealed quite plainly that these charges had nothing to do with the economic crisis into which the Government had led the country.

The contrast between the way in which the launderers are being treated—with the full rigmarole of the Prices and Incomes Act being thundered out against them—and the way in which the Post Office behaves is marked indeed.[Interruption.] If the hon. Member for Liverpool, Walton (Mr. Heffer) wishes to intervene he should get to his feet. I think that the hon. Gentleman is a good long way from standing up.

I will not refer to the services having deteriorated, because it is lamentable that the Postmaster-General should have made these increased charges without giving an indication that the services would be improved. It is merely a question of the public having to pay more and more for less and less and worse and worse.

I wish particularly to draw attention to the extent of these increased charges, a subject which has not been fully adduced. There was a 20 per cent. increase in the cost of parcels, a 30 per cent. increase in the cost of registered letters and recorded deliveries, a 20 per cent. increase in the remittance services and a 20 per cent. increase in the cost of overseas letters. These, by any standards, are substantial increases. On a turnover of £92 million in 1965–66, an additional £20 million of charges has been added; so that the Post Office is increasing its charges in this limited sector of the postal services by
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the massive amount of over 20 per cent. I notice the Postmaster-General beckoning. Does he wish to intervene?

The right hon. Gentleman misunderstood the point my hon. Friend was making. He was referring to the first three months after 20th July, as the right hon. Gentleman will sec when he consults the report of my hon. Friend's remarks in the OFFICIAL REPORT.

There is one piece of obnoxious skulduggery to which I particularly wish to draw attention. On 3rd March, 1966, Cmnd. 2931, Post Office Prospects 1966–67, was published. That came out 27 days before the General Election. The four items in the postal services covered by these Statutory Orders were shown in that White Paper to be making a loss of £11.4 million in 1965–66; £11.4 million on a turnover of about £92 million. It was fairly clear from the White Paper that parcels, registered post, overseas mails and the remittance services were already making a substantial loss. Meanwhile, in a Written Answer which the right hon. Gentleman gave me today, it was shown that his forward estimates for these four services in the postal sector would show a loss in 1966–67 of £17 million.

Was any hint given in that White Paper published 27 days before the General Election that we would see these increases in postal charges?[HON. MEMBERS: "No."] I think my hon. Friends are being a little unfair in saying "No". After all, in the middle of a paragraph on page 6 appeared these words:
… postal income will need to be reinforced over the next five years if the financial target is to be met".
I suspect that the cunning of those words came not from the Post Office but from Downing Street. It bears that touch ! The former Postmaster-General accused Reginald Bevins of holding back information before the 1964 General Election.

I turn that accusation and say, if Reginald Bevins was guilty, then the Postmaster-General, now Minister of
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Technology, is equally guilty in having given the information but holding back the increases until after the General Election, 1966. I remind the House of the words of the First Secretary of State in the election campaign:
This time there will be no more alibis.
I repeat that to the Postmaster-General. The facts were perfectly clear in the White Paper before the election that there would be increases in this sector of the postal services. The Government did not act at that time, but held them over until after the election and for that reason alone are to be condemned.

The hon. Member for Howden (Mr. Bryan) said that we had used the postal charges as a budgetary instrument. There is nothing contrary to the spirit of the 1961 Act in that. All Government Departments and all public corporations have played their part in putting right the economic mess left to us by the party opposite. Mr. R. A. Butler, as he then was, did this on a number of occasions. There is nothing unusual about it.

The hon. Member accused me of deception. I shall not accuse him or his party of deception. What I accuse him and his party of is sheer, downright incompetence in running the Post Office. What we have had to do stems directly from the utter neglect of the party opposite—and the hon. Member for Totnes (Mr. Mawby) was Assistant Postmaster-General in that period.

Will the right hon. Gentleman now finally answer the point that I have put again and again to the First Secretary of State: who made the challenge that we had issued fraudulent figures? I have issued this challenge in debate and never been answered.

The hon. Member for Totnes has called me a pawn. But he is the classic pawn—the trade union pawn in the hands of the Conservative Party.[HON. MEMBERS: "Cheap."] The hon. Member for Norfolk, Central (Mr. Ian Gilmour) said that we had only taken £1 million out of the economy. His hon. Friends argued that we had taken a massive amount out.
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They cannot have it both ways. The hon. Member for Belfast, North (Mr. Stratton Mills)—a Belfast Member of all people—accused us of skulduggery. That is just about as thick as the hon. Member for Totnes calling me a pawn.

Hon. Members opposite have made great play with what they describe as inconsistencies on the part of the Government in increasing postal charges at the same time that we impose the prices and incomes freeze. This only indicates that they have failed to grasp some very simple economic facts. The measures my right hon. Friend the Prime Minister announced on 20th July were aimed at two objectives.

The first was to relieve excessive pressure on demand and the second was to prevent that pressure building up again. The postal rate increases are helping towards the first of these objectives. The freeze is part of a comprehensive policy covering both prices and incomes and designed to achieve the second objective.[Interruption.] I did not interrupt the hon. Member for Howden. If he wants a reply, perhaps he would have the good manners to listen to it.

There are various ways in which a Government can remove purchasing power from the economy—by direct taxation, by higher duties on drink or other forms of indirect taxation or by charging more for services they themselves provide. Let me now explain why it was particularly appropriate to choose to raise some postal charges to contribute to this policy. It was simply and solely because of the appalling failure of the party opposite when it was in power to do what was necessary to keep the postal services on a sound financial footing.

As the House well knows, the problem of the postal finances had been put on one side for far too long by the party opposite. In 1961, the postal services made a small surplus of £1 million; in 1962–63, they made a loss of £8 million and right hon. Gentlemen opposite did nothing; in 1963–64, they made another loss of £8 million and right hon. Gentlemen opposite took no action. In 1964–65
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—it was too late for us to take any remedial action—the loss was £20 million, and still nothing had been done. For far too long right hon. Gentlemen opposite allowed large and vital sectors of the postal services to go into heavily increasing deficit.

In the end, they chose one measure to take to put it right, and the hon. Member for Totnes knows what it was. They refused to do anything about postmen's wages. That was their only contribution to putting the postal services right—holding down the wages of postmen. As a result, when we came into office we found the services being run on a basis which no management with a pretence to efficiency would have tolerated. The services were manned by staff whose morale was at the lowest ebb ever known in the history of the Post Office. The situation was such that it could not be dealt with at one go.

In 1965, we took the first two remedial steps. First, we dealt with postmen's wages and put them on a decent footing. Secondly, we increased some charges for the inland letter service. The increase in charges was no more than a holding action and was barely sufficient to arrest for a time the steadily worsening financial position.

Without the new tariffs, which hon. Members are challenging, the postal services this year would have lost £8 million and next year would have lost £19 million. These estimates take full account not only of the modifications which we are making in the services, but also of the great increases in productivity which we are getting, partly because of the help of our consultants, McKinsey and Co.

Faced with this financial outlook, I could do one of three things. First, I could have reduced the services. I went into this and found that it would have meant reducing the services to one delivery a day for the whole country, and that delivery a good deal later than now. Secondly, I could have borrowed against current losses but kept the present services going. The third course was to
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put up charges. I think that hon. Gentleman will agree that at the present time, at any rate, the public would certainly not be prepared to accept drastic cuts in services of this kind.

Of course, we could have continued with a large deficit and asked for loans. Is that what the party opposite would have done? Would right hon. Gentlemen opposite have run a deficit and borrowed, or cut the services, or increased the charges?

I tried to explain to the right hon. Gentleman that this is a situation which every business in the country is facing. This is an exceptional year. We are all asked to hold our prices until Christmas, but the Post Office alone will not.

The hon. Gentleman has not attempted to answer the question. If he aspires to do my job, he must say what he would have done. The deficit is the result of the mismanagement of right hon. Gentlemen opposite. What would they have done—cut services, borrowed, or put up prices? The hon. Gentleman knows quite well that he would not have carried a deficit of £20 million.

Some people have suggested that we should use the telephone profit to subsidise the postal side, but that profit is needed to finance the expansion of the telephone service and surely no one would wish that expansion to be put in jeopardy. My own view, and it is the view of everyone who has looked at this, is that the postal service ought to stand on its own feet. This is the reason why the increased postal charges had to come and why they were a highly pertinent measure for the Government to take on 20th July, as part of their determined effort to get the economy right. I make no apology for them; I will defend them anywhere.

In deciding which rates to put up, I had to bear very much in mind the increasingly heavy losses of some very important services, for example, the loss on the overseas services next year was expected to have reached as much as
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£5½ million and this on only £40 million worth of business and on inland parcels the loss was over £9 million. To continue with this policy of gross under-pricing and subsidising certain sectors of the business community was, in my opinion, out of the question, and it was to these services that I principally turned for the extra revenue. Indeed it is only fair—[An HON. MEMBER: "After the election."] Before the election. If hon. Members had listened, I said that before the election we put up postmen's wages and we put up inland parcel rates. We had the guts to do that.

It is only fair to remind the House that along with the increased charges I introduced some useful additions and refinements to our service. Local parcels cost us less to handle than other parcels and I passed this benefit on to the public by charging a shilling less for them. I have also introduced a new minimum weight for inland parcels of 1½ lbs. at 2s. 6d., which is cheaper than the old minimum of 2s. 9d. With the increases in registration charges I put up the old £20 compensation to £100.

Hon. Members will agree that the proper solution to the postal problem is a sound pricing policy, which will preserve the services at their present level, consistent with the efficient running of the Post Office and the commercial life of the country, and this is what I am determined to have.

I would remind the House, that overall, the telephone regulations will involve no net increase in Post Office revenue. They are designed simply to rationalise charges on a basis which is more related to costs. The increases here fall mainly on the public call office sector. Broadly speaking, what we have done is to reduce the price of S.T.D. calls, where the labour content is very much smaller. These calls are now pretty much the same as they were before the war.

I would like the House to reject this Prayer and to regard the policy we have followed as a sensible policy, and one which will maintain the services in their present efficient state.

I quoted these two conclusive paragraphs in the White Paper on Prices and Incomes, which said:
The Government intend to apply the principles of the standstill to all prices charges and fees of Government Departments.
Secondly, I quoted:
The nationalised industries will be subject to the same restraints as the private sector in relation to prices and incomes.
In the economic lecture given to us by the right hon. Gentleman, he has not got over this problem, why his Department should be immune from and

I have explained to the hon. Gentleman that there were two alternatives to this policy. One was to borrow and the other to cut the services. Does the hon. Gentleman want the services cut? Does he want us to borrow to finance this service? What we have had to do——